Universal Music CEO: We're Not In This To Make Art

from the of-course-not dept

Whenever debates come up about disruptive innovation in the entertainment industry, the big record labels and big movie studios like to fall back on claiming that they (and often they alone) are the last vanguards protecting our culture. They talk about how, without greater copyright protections, their "art" may die off. But, of course, as most normal people recognize, the labels and the studios (and the RIAA and MPAA who represent them) are not representing art at all, but commerce -- and just a specific type of commerce. They represent the gatekeeper model, which makes less and less sense in a digital world where we need filters and enablers, not gatekeepers. But it's pretty rare for them to actually admit that, since their entire public persona and lobbying efforts are based on "we represent culture and art."

And then, finally, an exec speaks the truth. In a quite interesting New Yorker profile of Scooter Braun, the man who made Justin Bieber into Justin Bieber, Lucian Grainge, CEO of Universal Music Group (the biggest of the record labels) explains why he named Braun the company's first technology "entrepreneur in residence" by admitting that "art" has nothing to do with Universal Music:

The company likes hits, the fans like hits, and that's what he's there to do--make hits. We're not in the art business.

It seems like people should remind him of this every time he or his lackeys claim they're defending art. Separately, the rest of the Braun profile is well worth reading. It highlights exactly what we've been saying for quite some time, that the real "business" these days is in finding other areas of the market you can build a business around -- areas that are made more valuable by digital content:

In the beleaguered music industry, few managers can afford to focus on just selling music anymore. When Braun met David Geffen, at a party a couple of years ago, he said that Geffen had one bit of advice for him: “Get out of the music business.” So Braun has been converting his twelve-person company, SB Projects, into a many-faceted organization: it now has film and TV arms (Braun recently sold a scripted show, and has reality shows in development), a publishing division, and a technology-investment unit, in addition to a label and a management company.

And how is he building up many of those other businesses? By leveraging the star power of Justin Bieber -- something that can't be "pirated" and which is a true scarcity that Braun can control:

His YouTube channel is approaching three billion views, and on Twitter, where he acquires a new follower every other second, a single tweet from him can mobilize his supporters to perform stunning feats: sell out Madison Square Garden in seconds, conjure a horde of three hundred thousand tweens in Mexico City, induce fans to buy a hundred and twenty million dollars worth of perfume (Bieber’s fragrance, Someday), or influence the conversation about world events—in March, Bieber’s tweets brought attention to the campaign to apprehend the Ugandan warlord Joseph Kony.

[....] Barry Lowenthal, the president of Media Kitchen, an ad agency that is promoting Bieber’s new fragrance, Girlfriend, told the Times that the reach of a Bieber dispatch across networks like Facebook and Twitter would cost ten million dollars to replicate through conventional advertising methods.

As the article really highlights, there are plenty of ways to make money in the business today -- but a lot of it isn't specifically about selling music. And while some people insist that's "selling out," Braun sees it differently:

And the end result is what we've been saying all along. There's tons of opportunity in and around the music business if you're smart and you know how to build a good business around it. In fact, the market is growing, and Braun recognizes that:

"This isn't a dying business, this is a changing business," he told me. "CD sales have declined drastically, but the over-all business has grown: licensing, merchandising, digital sales."

It always seems that, in these discussions, there's often an implicit conflict between art and commerce, when there doesn't need to be. But if someone's defending commerce, it should be clear that's what they're defending, and they shouldn't try to confuse that by claiming that they're really defending art or culture. Art and culture will live on no matter what. Commerce will shift around to the markets most appropriate. Neither need defending on their own, as they seem to survive just fine. The only thing struggling is one particular sector of the entertainment industry which built a "hit driven" business based on being a gatekeeper. And now we live in a world where such gatekeepers aren't necessary, and businesses can be built in other ways.

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Morris insists there wasn't a thing he or anyone else could have done differently. "There's no one in the record company that's a technologist," Morris explains. "That's a misconception writers make all the time, that the record industry missed this. They didn't. They just didn't know what to do. It's like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?"

Personally, I would hire a vet. But to Morris, even that wasn't an option. "We didn't know who to hire," he says, becoming more agitated. "I wouldn't be able to recognize a good technology person — anyone with a good bullshit story would have gotten past me." Morris' almost willful cluelessness is telling. "He wasn't prepared for a business that was going to be so totally disrupted by technology," says a longtime industry insider who has worked with Morris. "He just doesn't have that kind of mind."

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The irony is that all of these legacy gatekeepers started life as technologists.

The publishers were printers. The record labels ran record production plants. My earliest recollection of the letters RIAA relates to a technical issue - a standard for frequency equalisation in fact.

However as technology evolved they found it easier to farm out the technical functions to others. Few publishers now run a print shop and the switch from vinyl to CD saw a decoupling of the labels from the physical side of the business. I suppose that sitting on a set of monopoly rights and organising publicity is easier than actually making things,

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"I wouldn't be able to recognize a good technology person — anyone with a good bullshit story would have gotten past me."

I remember when TD covered this a while back, this line leaped out at me.

This single statement, more than any other, indicates complete incompetence at management. I suspect this incompetence is a powerful part of that segment of the music business, not something specific to him.

Here's the deal: if you have to be an expert at, or even know anything more than the most basic basics of, something in order to hire an expert in it, you're hiring skills are so laughable that you shouldn't have that job.

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If you are not willing to even bother to learn enough about something that is so deeply effecting your business to feel like you could understand why you'd be hiring some one to try and deal with it then you should realise that you shouldn't be in charge and step down.

Not, like you said, you actually have to understand something to be able to effectively hire some one to do it. I also find it amazing that some one in his place, who felt they personally couldn't hire some one, has no one he could trust with the task.

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"He wasn't prepared for a business that was going to be so totally disrupted by technology," says a longtime industry insider who has worked with Morris. "He just doesn't have that kind of mind."
In that case, he should retire.

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Maybe some of them.

But most seem to be happy to take in the butt for the tiny tiny tiny (often illusionary) sliver of copyrestriction control they get. Getting to sue people is more important than if your industry cares about you.

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"Illusory"

But most seem to be happy to take in the butt for the tiny tiny tiny (often illusionary) sliver of copyrestriction control they get. Getting to sue people is more important than if your industry cares about you.

"Most" who? Artists?

I don't know one single musician who believes that, or behaves in any way that is reflective of that statement. Most musicians sign to a label so they can move up out of the gutter and eat something more wholesome than ramen noodles cooked in a deli microwave.

I know exactly zero musicians who signed to a label for greater "control" of anything.

"The company likes hits, the fans like hits, and that's what he's there to do--make hits."

This is bollocks. I am a music fan as are millions other and I would say that the majority of fans don't give a stuff about 'hits'. We just want music that is enjoyable to listen to and for me that is music that never makes it as a 'hit'. More evidence that the labels haven't a clue what fans want.

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Quite right. There are a few newish British Prog Rock bands out there who are fantastic musicians and write wonderful songs but because Prog Rock isn't popular and is seen as 'geeky' they get no radio airtime. All I hear on the radio are chart songs which I have zero interest in.

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At least the XM/Sirius offering "20 on 20" is upfront about their limited offering (20 on 20: the "top" 20 songs played in order, over and over again, on channel 20). Even my 4 year old now thinks that is ridiculous...

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Yep. I stopped listening to music on the radio much earlier than that, but for the same reason. When all the local radio stations got purchased and programmed centrally, this kind of thing started happening. It turned radio from being the source of entertainment and exposure to interesting new music that local DJs made it into being a 20 song music player, but with ads.

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I would say that the majority of fans don't give a stuff about 'hits'.

I'm not sure I follow you here. Hits are considered "hits" because they're very popular with a very large segment of music listeners.

More evidence that the labels haven't a clue what fans want

Once again, this is confusing. If the hit is successful and profitable (and by definition, it must be) then it stands to reason that the label in question did know exactly what the fans wanted, in a particular instance.

We just want music that is enjoyable to listen to and for me that is music that never makes it as a 'hit'.

"We?" Or "me?" (meaning you) Most people, even those who wouldn't be considered die hard music fans, only want enjoyable music, too. And for most of them that would be the hits. That's why they sell so well. I think you're the outlier in this instance. Which is OK, I am too.

Maybe there's some confusion over the word "hit" and it's being interpreted as "bland pop" or music made with a cookie cutter or something similar. I'm no fan of most Top 40 music, but I wouldn't argue that it's not popular with its fans. That's inane. And some hits are quite good; I was more than pleased that something as left-field as "Someone That I Used to Know" reached the top of the charts this year. It's not exactly my kind of thing, but it's nice to hear a foreign underdog on US radio.

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Ah! Replied to the wrong thing; I wanted to repond to the bit about:

"That's a misconception writers make all the time, that the record industry missed this. They didn't. They just didn't know what to do. It's like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?"

'CD sales have declined drastically, but the over-all business has grown: licensing, merchandising, digital sales.

good to see this admitted for a change as well. all that is needed now is for the stupid fuckers that keep ramping up copyright laws to realise that they have been taken continuously for idiots by the one sector that is failing, the 'gatekeeper' sector and perhaps things can begin to really start to progress!

The same argument can be made against the attempts to drag in moral issues. It's all about money, not about morals. Time and again, the IP maximalists have shown it through their actions. Moral nor culture references are nothing but distractions and diversions from the main goal; profit at all cost.

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I wouldn't call it a "spawn of madness" - I believe it's something that we've all suspected. You know, along the lines of how the labels aren't really in it for the artist's support, which the copytards insist are never the case until a random executive grumpily repeats the observations of the sane.

Then the copytards lose their shit because their heroes have confirmed that we broke their code.

Finally

Finally one of the CEO's admits it's about the money. No shame in that. There is, however, way more than enough to go around in lying about it. No one begrudges the artists and labels making a buck. But lying and minipulation....that's another story.

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Piracy plays a big role

This is a fantastic post, Mike, and I think we're going to see the music change into a branding business more than anything else. After all, notoriety (brand equity) is the most valuable asset for musicians. Good music means a good rep. I wrote an article a few weeks back about the challenges the leaders of the music industry face called "If you were the CEO of Warner Bors. what would you do?" and it fits well with your own observations, Mike. If you have time take a look: http://blog.infinit.io/post/29470514820/if-you-were-the-ceo-of-warner-bros-what-would-you-do

I left behind the World of Big Corporate Labels in the Mid 70's Era.I am an original punk rocker and would much rather listen to Obscure, Indie, Little known bands who did not or never would sign with RIAA.
We are not in it for the Art !!!!
DUH, I knew that fact Decades Ago !!!

Lucian Grainge, CEO of Universal Music Group “Out of His Mind?”

We can appreciate that all businesses are free to operate the way that they see fit. The point of singling out Lucian Grainge, CEO of Universal Music Group’s statement is to bring attention to the philosophy that is a foundational flaw to what has gone wrong with record labels. The numbers don’t lie when it comes to what works, and what works is artistic expression!

If you were to take a look at the list of the largest selling albums in history, a vast majority of them have one thing in common and that is the artist had free reign of artistic expression. Regardless of the style of music, with each of these albums the artist was able to execute at a high level what they wished to express. The result was the labels having a catalog of music in which the same product finds large numbers of sales each time a new music format arrives on the scene. With that being said, when record labels offer themselves for sale the only thing they have to offer is their catalog! So the question is what makes a good catalog?

In short, a good catalog is a collection of music that resonates over time while consistently gaining new audiences who find themselves identifying even if the music was made 30 years ago. The only type of music the can truly pull that off is those works that contain the fullness of the artistic expression. Again, numbers don’t lie and a quick glance at the list of the biggest selling albums of all time will prove this beyond a shadow of a doubt. Labels can point the finger and complain about pirated music as much as they want, in reality it appears that “fast food music” was the real issue and pirating became the perfect scapegoat.

That leaves us with this formula: Full artistic expression + People relating + Proper exposure= Huge sales figures over long periods of time!